In any China-versus-India contest, 2009 belonged to China. Its 10.7 percent growth in the fourth quarter blew the doors off the 6.5 percent India may have experienced. It will be the toast of the town in Davos, Switzerland, this week at the annual meeting of the World Economic Forum.

China’s “old economy” is clearly booming, and investors haven’t made a lot of money betting against it. Why, then, would China’s leaders imperil their future prospects as 2010 gets under way? That’s what they may do by letting Google, the Information Age’s biggest name, walk away.

“I would look going forward for new investment increasingly to go somewhere else -- probably India, Brazil and other big markets,” William Reinsch, president of the National Foreign Trade Council in Washington, said on Jan. 21.

Google’s announcement this month that it is considering leaving China amid misgivings about censoring the Internet won’t change everything on its own. China’s top-down economy is thriving, while India’s is bureaucratic, inefficient and notoriously corrupt.

Yet India has a track record of innovation and a stable of internationally competitive companies that China doesn’t. India also has far superior laws on intellectual property and corporate governance. And China’s willingness to blow off Google plays to India’s relative advantage in these areas.

Bypassing China

China should be concerned about the most influential Internet tool bypassing its $4.3 trillion economy and 1.3 billion people -- and the specter of other Silicon Valley giants following suit. Executives at multinational companies who dragged their feet on diversifying investments away from China may now expedite the process.

At issue is the next phase of China’s development. Too much attention is on ideas of the last century: keeping labor cheap, holding down the currency, picking and subsidizing national champions and favoring exports for growth. China’s spat with Google underlines how the Communist Party relies on the strategies of yesterday, not tomorrow. It’s really a proxy for how the past and future are colliding.

Who knows, perhaps China’s mix of free-market policies and limits on free speech is a viable new model. It’s possible that China can thrive while censoring cyberspace and the media. Perhaps China will prove that it can leapfrog over years of domestic company building -- as with Lenovo Group Ltd.’s purchase of International Business Machines Corp.’s personal- computer business. China does, after all, have $2.4 trillion of currency reserves to deploy around the globe.

Ideas, Not Sweat

The odds don’t favor it, though. Letting Google leave may dull the long-term benefits of the trillions of yuan that China is throwing at the economy. It limits the participation of entrepreneurs in an age where ideas and impulses mean more than sweat on factory floors. It also makes it less likely that massive stimulus efforts lead to the kind of self-sustaining, indigenous economy that China needs.

The question is where China wants to be in five or 10 years. The world is now driven by knowledge flows, making it vital to stay attuned to the latest developments in any field. Only then can innovators ride the latest waves in international business and finance and create the hundreds of millions of jobs needed to raise living standards.

India’s Billionaires

Here, my thoughts are with India’s billionaires. They must be rubbing their hands together in glee as China’s leaders make an expensive miscalculation. According to a 2008 Forbes magazine poll, India may have the most billionaires by 2017.

China’s ultra-wealthy are growing in numbers. It’s better, though, for one’s billions to come from new ideas than from bubbles in the Chinese stock market, which rose 80 percent last year. What China lacks is a growing roster of homegrown knowledge-based and technology outfits creating jobs, pushing the country up the value chain and inspiring young people to become the next Bill Gates.

Nandan Nilekani, the co-founder of Bangalore-based Infosys Technologies Ltd., is often called India’s answer to Microsoft Corp.’s co-founder. When asked about the secret of India’s success in technology, Nilekani points to a free press and a rabid embrace of information flows. In other words, if India censored cyberspace, companies such as Infosys or Wipro Ltd. wouldn’t be what they are today.

Millions of rural poor people claim that corrupt officials steal their paltry wages, withdrawing money from post-office accounts without providing proof of identity. India turned to Infosys to devise a fraud-proof deterrent.

A year from now, Nilekani will roll out the world’s biggest biometric database to enable India’s 1.2 billion people, half of whom lack access to financial services, to open an ICICI Bank Ltd. account or sign up for a Vodafone Group Plc mobile phone.

It’s not the Three Gorges Dam or the Shanghai skyline, yet India’s technology billionaires are helping the government devise new strategies and spread the benefits of growth. China, for all its advantages, could use more of that dynamic. Waving goodbye to Google won’t help.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

Click on “Send Comment” in the sidebar display to send a letter to the editor.